FDIC closes 2 banks in Florida, 1 in Kentucky

WASHINGTON — Regulators on Friday closed two small banks in Florida and one in Kentucky, bringing the total number of U.S. bank closures to eight for this year.

The Federal Deposit Insurance Corp. said that state regulators closed First Federal Bank, based in Lexington, Ky. The bank had about $100.1 million in assets and $93.9 million in deposits as of Dec. 31. Your Community Bank, based in New Albany, Ind., agreed to assume all of First Federal's deposits and buy essentially all of the failed lender's assets. The FDIC also shuttered Florida lenders Heritage Bank of North Florida and Chipola Community Bank. Heritage Bank, which had two branches and was based in Orange Park, had about $110.9 million in assets and $108.5 million in deposits. FirstAtlantic Bank, based in Jacksonville, Fla., agreed to assume Heritage Bank's deposits and purchase essentially all its assets. Chipola Community Bank, based in Marianna, had a single branch and about $39.2 million in assets and $37.6 million in deposits. First Federal Bank of Florida, in Lake City, Fla., agreed to assume the deposits and purchase essentially all of Chipola's assets. The failure of the three banks is expected to cost the deposit insurance fund a combined $50.2 million. U.S. bank closures have been declining since they peaked in 2010 in the wake of the financial crisis and the Great Recession. In 2007 just three banks went under. That number jumped to 25 in 2008, after the financial meltdown, and ballooned to 140 in 2009. In 2010 regulators seized 157 banks, the most in any year since the savings and loan crisis two decades ago. The FDIC has said 2010 likely was the high-water mark for bank failures from the recession. They declined to a total of 92 in 2011. Last year bank failures slowed to 51, but that's still more than normal. In a strong economy an average of only four or five banks close annually. The sharply reduced pace of closings shows sustained improvement. From 2008 through 2011, bank failures cost the deposit insurance fund an estimated $88 billion, and the fund fell into the red in 2009. But with failures slowing, the fund's balance turned positive in the second quarter of 2011. The FDIC expects bank failures from 2012 through 2016 to cost $10 billion.

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